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Deviations from time priority on the NYSE

Robert Battalio, Robert Jennings and Bill McDonald

Journal of Financial Markets, 2021, vol. 53, issue C

Abstract: The New York Stock Exchange (NYSE) is the only U.S. equities exchange that offers parity allocation of all trades. Parity requires that orders from each floor broker, the designated market maker, and the top of the electronic limit order book trade together. Thus, floor trading interests can trade ahead of equally-priced, previously arriving orders in the limit order book. The presumption on the NYSE is that floor traders provide valuable services to the investing public and one approach to remunerating them for these services is deviating from strict time priority. Our research attempts to quantify the cost of this privilege.

Keywords: Secondary priority rules; Designated market maker; Floor broker; Limit order (search for similar items in EconPapers)
JEL-codes: G23 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.finmar.2020.100567

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